To be able to pay the news minimum wage, the Valued Added Tax, VAT, paid by Nigerians will increase by about 50 per cent.
This declaration was made on Tuesday by the Federal Government.
The Minister of Bugdet and National Planning, Udoma Udo Udoma, made this known while speaking during a session by Senate committee to explain details of the 2019-2021 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
The same position had earlier been stated by the chairman of the Federal Inland Revenue Service, Babatunde Fowler.
The increase in VAT, it was stated, would create the necessary fund to pay the new minimum wage as has been approved by the National Assembly.
Said Udoma: “It will be recalled that as a result of agitations from the unions that the President set up a tripartite committee to look at the Minimum Wage.
“Every five years, it is supposed to be reviewed. It has not been reviewed even though there is no doubt that for both the Federal Government and states, it is a tough time to review wages. But the N18,000 is really too low and it is difficult for people to live on N18,000.
“The President supported a revision but it is important that as we are revising (the Minimum Wage), we make sure that it can be funded. That is why we set up the Bismark Rewane Technical Committee.
“So, we will be coming to you. There may be some changes maybe in VAT and other things. But we will be coming to you in order to make sure that we can fund the Minimum Wage.
“Not just fund the Minimum Wage but as you announce it, you now enter into negotiations with those above the Minimum Wage and we have to be prepared for that.”
While speaking in the same vein, Fowler said, “By the end of this year, we should be ready for an increase in the VAT. A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher. They pay when they go for those trips. We should be ready for an increase on VAT.
“I can certainly see an increase in VAT of at least 35 per cent to 50 per cent this year based on our enforcement activities. There certainly will be an increase in Company Income Tax and also on Petroleum Profit Tax.”
